AMENDMENT NO. 1
TO
TITLE XI RESERVE FUND
AND FINANCIAL AGREEMENT
CONTRACT NO.
MA-12953
Contract No. MA-12953
AMENDMENT NO. 1
TO
TITLE XI
RESERVE FUND AND FINANCIAL AGREEMENT
This Amendment No. 1 to Title XI Reserve Fund and Financial
Agreement ("Amendment No. 1") dated as of August 22, 1996,
between Avondale Industries, Inc., a Louisiana corporation (the
"Company"), and the United States of America, represented by the
Secretary of Transportation, acting by and through the Maritime
Administrator (successor by operation of law to the Secretary of
Commerce, acting by and through the Assistant Secretary of
Commerce for Maritime Affairs) (the "Secretary"), pursuant to the
provisions of Title XI of the Merchant Marine Act, 1936, as
amended.
RECITALS
A. The Company and the Secretary entered into that certain
Title XI Reserve Fund and Financial Agreement, dated as of
February 9, 1995 (the "Original Agreement"), in connection with
the financing of the Company's shipyard modernization project;
and
B. The Company and the Secretary desire to amend the
Original Agreement to reflect modifications to certain covenants
contained in the Original Agreement.
NOW, THEREFORE, in consideration of the premises and other
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE FIRST
ADDITIONS, DELETIONS AND AMENDMENTS
1. Concerning Article Third of the Special Provisions of
the Agreement. Article Third of the Special Provisions to the
Agreement is hereby amended as follows:
(a) Concerning Section 13 of Exhibit 1:
(1) Concerning Subsection 13 (b)(12). Subsection
13(b)(12) of Exhibit 1 hereto is amended by deleting
the word "and" before the number "(iii)" and
substituting a comma therefor, and, after the number
"(iii)" deleting the rest of the subsection and
inserting the following in lieu thereof:
"(A) mortgages, liens, security
interests, charges or encumbrances
(hereinafter a *Lien*) on any property
or other assets of the Company of the
type that are subject to a Lien on the
date hereof (whether or not such Lien
may subsequently be released and then
regranted and whether or not such
property or assets now exists or may
hereafter arise) other than the
Security, the Increased Security, the
Premises and the Shipyard Project
(hereinafter referred to collectively as
the *Secretary's Collateral*) and (B)
Liens on the proceeds and products of
any such property or assets (other than
the Secretary's Collateral), any
property or assets acquired with the
proceeds of or in exchange for any such
property or assets (other than the
Secretary's Collateral), or the accounts
receivable generated from any such
property or assets (other than the
Secretary's Collateral), and (iv) Liens
to secure indebtedness or obligations
incurred to extend, refinance, renew,
replace or refund (or successive
extensions, refinancings, renewals,
replacements or refundings of) any
indebtedness or obligations secured by
any Lien permitted by the foregoing
clause (iii) so long as such Lien does
not extend to any other property
(including, without limitation, the
Secretary's Collateral.
Notwithstanding any other provision of
this subsection 13(b)(12), the Company
shall not consummate the Disposition or
Lien permitted hereby if it would
adversely affect the priority of the
Secretary's security interests in the
Secretary's Collateral or in that
certain drydock designated Avondale
Drydock, having Official Number 568190."
(2) Concerning Subsection 13(c)(6). The
provisions of Subsection 13(c)(6) of Exhibit 1 hereto
are hereby amended and restated in their entirety to
read as follows:
"Enter into any merger or consolidation or
convey, sell, lease, transfer or dispose of
(hereinafter a *Disposition*) or mortgage,
grant a security interest in, lien or
otherwise encumber (hereinafter, a *Lien*)
any substantial portion of its properties or
assets. The foregoing restriction, however,
shall not apply to (i) (A) Liens on any
property or other assets of the Company of
the type that are subject to a Lien on the
date hereof (whether or not such Lien may
subsequently be released and then regranted
and whether or not such property or assets
now exists or may hereafter arise) other than
the Security, the Increased Security, the
Premises and the Shipyard Project
(hereinafter referred to collectively as the
*Secretary's Collateral*) and (B) Liens on
the proceeds and products of any such
property or assets (other than the
Secretary's Collateral), any property or
assets acquired with the proceeds of or in
exchange for any such property or assets
(other than the Secretary's Collateral) or
the accounts receivable generated from any
such property or assets (other than the
Secretary's Collateral), and (ii) Liens to
secure indebtedness or obligations incurred
to extend, refinance, renew, replace or
refund (or successive extensions,
refinancings, renewals, replacements or
refundings of) any indebtedness or
obligations secured by any Lien permitted by
the foregoing clause (i) so long as such Lien
does not extend to any other property
(including, without limitation, the
Secretary's Collateral), and (iii) any
Disposition of or Lien on property or assets
of the Company (and, in the case of Liens,
any extension, refinancing, renewal,
replacement or refundings of the indebtedness
or other obligations secured by such Liens),
provided that (A) after giving effect to any
such Disposition or Lien the Net Book Value
(as defined below) of the aggregate of all of
the assets that have been the subject of any
Disposition or Lien (excluding the assets
subject to the Liens permitted by clauses (i)
and (ii) above) during the immediately prior
12 month period does not exceed an amount
equal to 10 percent of the sum of the total
Net Book Value of all of the Company's assets
(excluding the assets subject to the Liens
permitted by clauses (i) and (ii) above) as
indicated on the most recent audited annual
financial statement required to be submitted
pursuant to Section 14 hereof, (B) the
Company retains the proceeds of (x) the
Disposition or (y) the indebtedness or other
obligations secured by the Lien for use in
accordance with the Company's regular
business activities, including without
limitation, the repayment of indebtedness of
the Company and (C) the Disposition or Lien
is not otherwise prohibited by subsection
13(c)(2) above. *Net Book Value* is defined
as the original book value of an asset less
depreciation calculated on a straight line
basis over its useful life.
Notwithstanding clause (iii) of this
subsection 13(c)(6), the Company shall not
consummate the Disposition or Lien permitted
by such provision without the prior written
consent of the Secretary if the Company has
not, prior to the time of such Disposition or
Lien, submitted to the Secretary the
financial statement required by Section 14
hereof, and any attempt to so consummate such
Disposition or Lien absent such approval
shall be null and void ab initio.
Notwithstanding any other provision of this
subsection 13(c)(6), the Company shall not
consummate the Disposition or Lien permitted
hereby if it would adversely affect the
priority of the Secretary's security
interests in the Secretary's Collateral or in
that certain floating drydock designated
Avondale Drydock, having Official Number
568190."
ARTICLE SECOND
COUNTERPARTS
This Amendment No. 1 may be executed in any number of
counterparts. Each of said counterparts shall be deemed to be an
original, but together shall constitute but one and the same
instrument.
ARTICLE THIRD
AMENDMENT
The Original Agreement, as amended and supplemented by this
Amendment No. 1, is in all respects confirmed and shall remain in
full force and effect.
[INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, this Amendment No. 1 has been executed
by the parties hereto on the day and year first above written.
AVONDALE INDUSTRIES, INC., as Shipowner
By: /s/ THOMAS M. KITCHEN
_________________________________________
Thomas M. Kitchen, Vice President
ATTEST:
/s/ BL HICKS
_____________________________
Assistant Secretary
UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
BY: MARITIME ADMINISTRATOR
By: /s/ JOEL C. RICHARD
_________________________________________
Secretary, Maritime Administration
ATTEST:
/s/ PATRICIA E. BYRNE
_____________________________
Assistant Secretary
Maritime Administration